Asian Stocks to Fall as Yen Plunges to Fresh Low: Markets Wrap

(Bloomberg) — Shares in Asia were set to open lower after US tech stocks fell in late trading while the yen weakened, triggering fresh speculation officials may step in to support the currency.

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Equity futures for Japanese, Australian and Hong Kong stocks declined, in a sign regional shares may slip after two days of gains. Big tech got hit in late US hours after Micron Technology Inc.’s outlook failed to meet the lofty expectations for the industry that has powered the bull market in stocks. Contracts for US stocks fell in early Asian trading.

The yen was flat early Thursday after a sharp decline in the prior session weakened the currency to almost 160.9 per dollar, the lowest level since 1986 and well past the level where officials intervened in April. The currency has lost around 14% against the greenback this year.

As the yen weakened, the dollar rose. An index of greenback strength touched the highest level since November on Wednesday. Treasuries sold, pushing the 10-year yield eight basis points higher to above 4.3%. Meanwhile, a $70 billion sale of five-year notes showed signs of good demand.

“It’s all about the Fed. Higher for longer is keeping the front end of rates very high, drawing money into the US and keeping the dollar strong,” said Andrew Brenner, head of international fixed income at NatAlliance Securities LLC. For Japan, “it’s a problem.”

Micron Technology shares slumped after the maker of computer memory chips projected sales that trailed the estimates of some investors. The news dragged down some chipmakers including giant Nvidia Corp.

Also after Wall Street’s close, the Federal Reserve said the biggest US banks passed the annual stress test, paving the way for higher shareholder payouts.

The recent market attempt to broaden out of the megacap group was short-lived, with a bevy of measures still showing how market breadth remains weak — boosting uncertainty about the rally’s staying power. Bifurcation between S&P 500 performance and breadth has reached one of the worst levels in three decades, according to Bloomberg Intelligence.

“The stock market is way too reliant on big tech — period and end of story,” said David Bahnsen at The Bahnsen Group. “Whether or not the past week’s volatility in tech is the start of something deeper or if that reckoning is still forthcoming remains to be seen, but excessive investor sentiment, euphoria and overdone momentum always ends the same.”

Elsewhere in Asia, data set for release in Asia includes Japan retail sales, Australian job vacancies, China industrial profits. The Philippines will also hand down a monetary policy decision.

In commodities, gold fell to the lowest level in around three weeks, while West Texas Intermediate was little changed.

Key events this week:

China industrial profits, Thursday
Eurozone economic confidence, consumer confidence, Thursday
US durable goods, initial jobless claims, GDP, Thursday
Nike releases earnings, Thursday
Japan Tokyo CPI, unemployment, industrial production, Friday
US PCE inflation, spending and income, University of Michigan consumer sentiment, Friday
Fed’s Thomas Barkin speaks, Friday

Some of the main moves in markets:

Stocks